Tuesday, 27 January 2009

In truth, it is too soon to tell whether the Government's rescue package has worked. Indeed, success will itself be difficult to define. “If we are back in growth by the first quarter of next year then I think you can say it has worked,” a Cabinet minister says - but even that relatively benign outcome could be classified as failure, as the Chancellor predicted in his Pre-Budget Report that growth would resume in the second half of 2009.

Mr Brown's problem is that he has - for noble economic reasons, as well as less noble political ones - downplayed the likely impact of a recession while talking up his own ability to tackle it.

Brown has a long history of doing this sort of thing, leaving himself exposed to hostages to fortune for short term political expediency. It is exactly this sort of attitude that led to him claiming to have abolished "Boom and Bust". It sounded good to him at the time and allowed him to paint himself as being the answer and the opposition as linked to the old way of doing things. Of course now we are in a bust and it is clear that we were previously in a boom engineered by Brown, his former statements on this look ridiculous. It is made worse by his absolute inability to admit his mistakes or even that he said those words previously.

The same problem will happen again with his and Darling's predictions for the economy this year. It doubtless seemed politically expedient to say in the PBR last year that they thought the economy would start to recover in Q3 this year. I am sure there were many treasury man hours taken up putting the bess gloss possible on the figures and being as optimistic as they could get away with to achieve this end. And whilst it may have made some people feel slightly better on the day, no serious economists or commentators believed that this would be the case. Now it is looking extremely unlikely that there will be any recovery before 2010 at the earliest but the government will struggle to take any credit for this (even if it is due) because of the cack-handed way they have spun this situation against themselves.

For a supposed political genius, it seems to me that Brown is far too often found with the gun pointing directly at his own foot and he seems unable to stop himself pulling the trigger.